In its second-quarter market report, the World Investment Platinum Council said platinum could see a deficit of 1 million ounces, "the largest deficit on record in terms of both absolute ounces and as a percentage of annual demand," the report said.
According to the report, demand is being driven by consumption in the automotive sector. Platinum is a critical element in catalytic converters, which are used to reduce harmful emissions in diesel and gasoline-powered engines. However, the auto sector is just one pillar of the platinum market that is seeing increased demand. Sterk said that industrial demand, driven by glass manufacturing and chemical production, have consumed more platinum this year.
"Platinum ETF holdings grew by 155 koz in Q2'23, their largest quarterly increase since Q3'20 and up 196 koz since the start of the year, with significant renewed interest from South African funds. However, overall ETF holdings are expected to soften during the rest of 2023," the analysts wrote in the report.
"Refined mine production declined 4% year-on-year in Q2'23, totaling 1,464 koz, as increases from North America and Russia were heavily outweighed by a decline from South Africa. Following three consecutive quarters of declining supply, South African output improved this quarter, reaching 1,028 koz. Nevertheless, this was still a 9% decline year-on-year, primarily due to processing-asset maintenance in addition to disruption due to Eskom load curtailment," the report said.
"Looking beyond today's Platinum Quarterly, our research shows that automotive and industrial demand growth underpin total demand growth in 2024 and beyond. This offers both short and long-term value incentives for investors, as well as protection from downside risks presented by inflationary headwinds and high interest rates."